hi everybody, welcome to "the wall street journal report," i'm maria bartiromo. happy labor day weekend,

everybody. the chairman speaks, the republicans meet, and feeling the heat. the dog days of summer. but what will the markets do as we head do the f fall. the state of the american labor and where will the jobs come from. my conversation with hilda solis. >> where is the innovation. >> the answer may surprise you, where young people are headed to lo for jobs. "the wall street journal report" begins right now. this is america's mber one financial news program. "the wall street journal report." now, maria bartiromo. first,t, though, let's get bill griffith with a look at the stories making headlines th week, bill? thanks maria, here are stories making news as we head into a new week on wall street of the it is summertime, but will the living be easy? central baers from arnd the world are meeting in jackson hole, wyoming, they're waiting %o hear whether or not federal during his speech, he said he would not rule out fed would act to predict growth as needed. it was a slow week for the markets, untiltly up, showing a annualized growth rate of 7.1%'s not enough to meaningfully lower the unemployment rate the case price index shows that prices r rose in junfrom the artly link of more than 90% of the oil production in the gulf was shut down because of hurricane isaac. and of course,e are in the peak driving season. than the economic summit in jackson hole? who is there, or who is not? joining us, david wessel, author of the new book "red ink" inside the high stakes politics of the federal budget. david, thank you for joining us. >> a pleasure. >> let's start with the annual conference at jackson, that is highly anticipated. the markets, ben bernanke looking for clues about possible quantatitive easing, he said the

tools were ineffective in providing the concentration. >> i think it mea the fed does step in, basically i summarize his speech this way, quantitative easing, the economy is still sick, the medicine can help them, i'm going to give them more medicine, probably in september. >> all right, he needs more data, the jobs number, and all that. also nable who was not in the meeting, the european bank central predent, mario dhragi, why was he absent this week? >> you know, he has a full plate, we talk about how divided the meetings of the policy are, some people want to do more, some less. that is nothing compared to what mario dhragi faces. so i think it is not easy to get

from germany there. usually it is quiet, not so in europe this year, and secondly, he is trying to work out a compromise within his organization that will allow him to do more to help the european economy without having the germans walk out of the room. >> let's talk about the subject of your -- your latest book, the massive budget deficit and grid lock, will we fall off the fiscal cliff with the tax cuts set to expire in january? >> you know things are so bad in washington that people can't even agree if you're going to go over the fiscal cliff or run into it. so i don't see anything happening in the short termrm. if mitt romney wins, they just delay the whole thing in the next six to nine months, with the argument that the president should havche a chance to put t budget together. the interesting thing is if a ama wins, the white house

indicates they're going to have negotiions with the republicans, and they're trying to look -- bold enough to go over the fiscal cliff as a bargaining tactic with the republicans. whether it works, gosh, i don't know. >> h do you read the difference between the president and mitt romney in their approach to fixing the deficit? especially when it comes to medicare? do you think either has a chance to repair that? >> well, i hope so because the program is broken. i wrote a column this week suggesting that whoever is going to cut medicare is a real distract, both of them are going to cut medicare, because changing the program is not going to cost as much as predicted. the obama budget and paul ryan's budget, the one crafted by mitt romney's result, basically takes us to the same amount of money spent ten years from now. but they get there in a very fferent way. do we have the government change is, trying to make providers

more efficient? or do we do it the mitt romney, ryan away, where seniors choose on private plans and a traditional medicare plan, that would be a great debate to have. >> you made it very clear you're not very optimistic on the way to deal with the debt in washington. how do you see it playing out? is it at least go that it bec e becomes a big presume race? >> yes, i think it is good we're in the post denial phase in to discuss of the deficit. very few people in washington repeat the phrase of dick cheney that deficits don't matter. everybody kind of said that deficits matter. but i can't figure out what forces them to the table to compromise the action. it seems to me it takes a crisis, either a financial one or an artificial one, or could it be a sudden outbreak of leadership? unfortunately, i don't see the

latter happening any time soon. so the question is whether or not there is a mood that we have to get things done, and prove to american people that congress divided between the democrats and republicans, can govern after the election. we may get there but we're not there yet. >> does that mean you don't feel that the election will change things when it comes to the deficit? >> i don't think it will change much, i don't think either side will win decisively, president obama if he win -- if mitt romney wins, even if he gets the senate, democrats will have enough votes to block whatever he wants to do. so the only way this gets done is if the loser decides that governing is more important than scoring points for the election. >> david, always good to see you, thanks. . now backck to maria and the rest of the program. up next on "the wall street journareport," on the labor

daday weekend, where are the jo? my discussion on the work and the work force with labor secretary, hilda solis. and how the office and benefits, and careers of the future may benefit. as we come back and take a look at the stock market. back in a moment. exclusive toto the military, and commitment is not limited to one's military oath. the same set of values that drive our nation's military are the ones we ed to buildld usaa bank. th our award wning apps that allow y you to transfer funds, pay bills or manage your finances anywhere, anytime. so that wherever yoyour duty takes you, usaa bank goes with you. visit us online to learn what makes our bank so different.

welcome back. most of us are enjoying a long holiday weekend for labor day this weekend. the holiday to mark the contribution of the american worker. with a very high unemployment rate, though, many americans are concerned about the f future of their jobs. joining me now for a special look at where the jobs are and not in today's economy, is labor

secretary hilda solis, great to have you on the show. thank you for joining us. >> great to see you, thanks. >> so the unemployment rate above 8%, we have not seen the consistent job growth that most experts agree is required to lead a sustained recovery. how do you characterize the situation in the country today? >> you know, maria, i have to look back at the last three and a half years, and to be certain, we're on a good path, i believe, to recovery, because we have already seen about 4.5 million private sector jobs created in 29 months. and we've also seen a slow recovery in areas like manufacturing, and 500,000 jobs in manufacturing alone that have come about in the last two years. and half of that has even been evident in the automobile industry because of the investments this administration made. and we're mang a lot of investments with businesses an community colleges. so we're partnering with them to make sure that we have the skill sets available that employers want and need. that is what i have been hearing

around the country as i travel from west coast to east coast. let me ask yoyou, because s much debate and cversation these days, the secretary -- about the fiscal cliff, the tax cuts expiring, the spending programs expiring. all this has led the economists to say that the rate could topple 20% and we could see recession. what is your take on the bush tax cuts? should they be extended? >> well, as you know the president has looked forward to the discussion with congress and the senate, and hopefully we can get to some sort of resolution where we don't go off the cliff. because it was never our intention to do that. and right now we can close the gap if we just allow the revenues to be raised and put the focus on the individuals who could afford to pay more on the increase in their taxes, and that would be the millionaires

and billionaires. >> well, let's be fair, taxes are going up for more than anyone making $200,000. so that is not exactly a millionaire or billionaire. so should we really have the stand off on the raises on the taxes for the billionaires, so we're all waiting to see what happens. because everybody is going to see their taxes go up, above $200,000. not millionaires. >> well, i would think that hopefully, the public will contact their representatives so that we can get to the table. the president has been willing to hear any ideas and any discussion that will help get people to the table. but that has not been the case. and i would just say from where i sit, we have been working very closely with our friends in the private sector. we did a five-state tour in manufacturing and the investments with community colleges. and there are a lot of

businesses who say you know what? we're not going to wait for government, we're going to plan for future and future work force. but tell us where the jobs are right now, secretary, where do you see hiring happening in the country? >> i see it happening in areas like manufacturing, andin high tech areas. i stillll think that the best b we have is by g getting more people to get skilled up. and that means getting additional credentials at community colleges. that is why the president has made so much funding available so we could partner with private industry and community colleges to make sure that the curriculum reflects the actual type of technique and work that those employers want. >> let me ask you, secretary solis, i know that companies and defense companies have to give employees a certain amount of time, heads up, before they lay off the people because of the spending programs going away. i believe they will have to tell the employees their jobs are cut by october one, are you

expecting a big number of layoffs as a result of the spending programs going away, and this fiscal cliff issue? are you e expecting a lot of layoffs at year end? >> well, what i'm expecting is that everyone work through due diligence here, because you shouldn't falsesely give o out tice if you infact have not been notified that your contract is not going to be renewed. >> everything has changed so much, we call it the new normal, but of course, industry after industry, you are seeing technology differences, things changing. if you started your career today, secretary solis, where would you want to work? >> well, i would want to make sure that i have the skill sets available, and that means soft skills and also technical skills. so i would first of all want to make sure that whatever credentials i get. and i'm talking about a one or two-year credential that you would obtain at a community college, that are low cost and would turn people away.

i would look at that, and look at traditionally apprenticeship people, for example, welding, did you know many have that skill? we have gone so far away from the manufacturing area that it is very hard to find people with those skills. >> that is a great point, secretary, great to have you on the program, thank you so much, and happy labor day to you. and social media, and stores, shoes whato they have in common? see where i'm serious, we compare our direct res side byide to find you a great deal, evenf it's not with us. [ dingng ] oh, that's helpful! well, oucoany does that, too. actually, we invented that.. it's lika sauna in here. helping you save, even if it's not with us -- now, that's progressive! call or click today.

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this bridge. your new car probably rode thesed rails. that shipment you just received was tracked by satellite. we build and maintain. we invest and innovate. so we can deliver what america needs. this year alone, freight rail companies plan to spend twenty-three billion of their own money, not taxpayer dollars, to build bridges, maintain track, and develop new technologies to keep freight rail and our economy moving. there's a lot riding on these rails.

when it comes to the best jobs of today and tomorrow, can we do better by thinking more creatively, like the industrial jobs of the past? my next guest says we're looking at the greatest opportunity lying in a creative age. richard florida is the author of this book, good to have you on the program. four or five years into a sustained financial crisis, very high unemployment, these are issues we're talking about all the time. you said an interesting thing in your book, the longer the crisis goes on, the smaller the ideas get for fixing it. tell me about your big idea on this, the transformation on the classes. >> well, it is interesting,

people are bringing back manufacturing jobs, we'll bring back some, a couple of million or 100,000, they're saying education people for the new jobs. now there are professional jobs, management jobs, arts and crafts, they're growing at a good pace. if you have a ba, a bachelors, under 5%, we have 60-plus million americans today, 45% of our work force doing the low-wage service jobs, the people who prepare our food, take care of our aging parents, our kids, wait on us in shops, retail clerks, and those jobs pay 25 grand, 30, not secure jobs. what i argue about in the book, talk about in the ountry, we have to make those low wage service jobs, we have to somehow boost them up, make them better j jobs. >> if we're relying on them, how do we make them better paid

jobs? >> well, we did it in manufacturing, and this is how we go back and make these solutions, my father, born in the '20s, got a job in a factory, it took nine people to make a family wage when he got the job. he came back from normandy, he said i came back, put you boys through college. we decided we could pay more, that is what we have to do with services. you know what? when you look at the best service companies. i have done that, i have looked at zappos and other studies, there is a published work, when you look at the retail workers, they engage their workers, get better customer service, higher productivity, it is a win, win for the worker and for the company. >> where is the innovation, who is innovative when it comes to service jobs and blending them with creative jobs?

>> well, i think when you look at the annual list of the best employers, you get the high tech companies, but you also get companies bubbling up like the container store, my good friend, with zappos, they are very innovation, you buy the shoes on line, they send them to you. but they did the rolee model of engaging the employees, they can become better service workers, and you solve the problem, you get the workers together. they engage in continuous improvement. that is the other really interesting thing about zappos, now this can't happen everywhere. they're out of the suburbs, moving back to downtown, taking over the old city hall, but they're buying up old condos and they're creating more affordable housing so they can pay their workers better. give them an opportunity to move up from within, but now they can get a little more affordable housing. they're tackling it. that is what the best service companies are doing. >> and where are your students

with respect to education? where do they live and want to work? >> well, this is a big shift i talked about in the book. i talked about it ten years ago, but it has shocked me what happened over the past ten years. young people in the tech field who used to go to the office park, and silicon valley, that is still a great place. but more and more people want to be in the big city -- cities like on the west coast, or new york city, i said what if you want to go to the suburb, and you buy a big house, and want to go there? no, i'll take a smaller space, in a dynamic city, one thing we're seeing is high tech. >> i think it is really interesting, for a long time it was about silicon valley in terms of entrepreneurs, nowou see it in brooklyn and across the country. >> and it is still the number one place for start-up cocompanies. but number two is new york, the

number two place, twitter put its headquarters in san francisco. so i think you see this new shift. what i like about this, is it offers up the city as a place not only to solve technical problems. not only to do new software, but create business models. maybe when you have an interesting guy like mayor bloomberg, or a very good problem-solver like rahm emanuel, you could actually see this social media solving big urban problems. and for me, it seems like a big step for our country. >> i agree with you, a great story. thank you for joining us. >> thank you. >> you too, richard florida jojoining us.s. up , we'll take a look at the impact on your money, and why you mayay be driviven to distraction if you're in your car, stay with us. but u see, with the help of her raymond james financial advisor, she had planned for every eventuality. ..hich meant she continued to have the means to live on...

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for more on our show and our guesests, check out the website wsjr at cnbc.com. and look for at maria bartiromo. and now for a look at the stories that could impact your money. monday is labor day, obsbservin th p places closed. and the dnc beginning g in charlotte, north carolina, and a preview of next season's clothing. and friday, the monthly jobs report will be out from the department of labor, we'll find out the number of jobs lost or gained in the month ofof august and finalllly, today, you a not alone if you spent any part of this holiday weekend in your

car. triple a says at least 50 million americans will travel away from home, a 50% increase from last year, and the highest number from the recession in 2007. that means more americans are spending money, a good sign for the economy. thank you for joining us, next week, a walk down one of the oldest streets takes me to a place where everybody knows your name. the neighborhood institution, i'm so glad you called. thank you. we're not in london, are we? no. why? apparently my debit card is. what? i know. don't worry, we have cancelled your old card. great. thank you. in addition to us monitoring your accounts

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